Getting to 50% renewables a ‘no-brainer’ — utility CEO

Source: Anne C. Mulkern, E&E reporter • Posted: Thursday, May 19, 2016

CARLSBAD, Calif. — California’s mandate to make half its electricity from renewable sources by 2030 isn’t just feasible, “it’s a no-brainer. We will get there,” the head of the state’s largest utility said here yesterday.

Anthony Earley, Pacific Gas and Electric Co.’s chairman, CEO and president, said his utility already is ahead of the state’s earlier mandate to generate 33 percent of its power from green sources by 2020.

PG&E will hit that mark this year or next, he said at the Fortune energy, technology and sustainability conference here.

“We’ve already got line of sight to projects that will get us to the 50 percent,” Earley said. “So I’m confident by 2030 we’ll meet that 50 percent.”

California last year raised its requirement for the amount of energy that the largest utilities must make from green sources. It had earlier been 33 percent by 2020. S.B. 350 increased it to 50 percent by 2030.

In California, utilities are limited in what they can count as renewable energy. Wind, geothermal energy, small hydropower and utility-scale solar qualify. Rooftop solar, large hydropower, energy efficiency and nuclear are not included.

Because of that, “by the time we hit 50 percent, the state will be actually producing 75 percent of its electricity from non-greenhouse-gas-producing sources,” Earley said.

Asked whether it seemed “too easy,” Danny Kennedy, managing director of the California Clean Energy Fund, said that the Golden State needs to make grid upgrades.

“There are challenges to that, which include storage,” Kennedy said. “To be ready by 2030 with massive amounts of commercial storage, we need to start rolling it out now, which means the regulatory rules need to be written now.”

Fortune moderator Brian Dumaine asked whether energy storage is a necessity. Kennedy said that 50 percent green power could be accomplished without storage, but that “it will probably be done with storage.”

At the same time that there’s a push to increase renewable power in the state, Kennedy said, there will be some “shedding” of existing solar. At some times of the day, there’s so much solar, there are no buyers for it in the power market.

Right now, rules limit how much of the excess can be sold outside the territory managed by the California Independent System Operator. The grid manager is working on adjusting those restrictions.

‘People lead … businesses get in line’

Alex Laskey, president and founder of Opower, which sells utilities ways to analyze customer power usage, said switching to rates based on when power is consumed will become increasingly vital. A study by the Rocky Mountain Institute said moving people across the United States to “time of use” rates would reap $60 billion annually in savings.

The grid on average is used to half its capacity, Laskey said. It’s built up to meet peak power usage moments.

Once time-of-use rates are more fully implemented, he said, customers will shift when they run dishwashers or do laundry. Whirlpool and others will sell smart appliances, and car companies will sell electric vehicles that help manage usage.

Consumers will be able to justify the spending of buying new appliances because they’ll save on their electricity bills.

California electricity customers will switch to default time-of-use rates in 2018.

Moderator Dumaine asked why the California model hasn’t spread to other states.

Kennedy said that “it is spreading, slowly.” California put in building codes aimed at energy savings years ago and tightens those every few years. It has passed rules on how much energy appliances can use.

“We’ve just had a head start,” he said. But the state demonstrates that it creates jobs. The distributed solar business employs more people than utilities, he said.

Earley noted that California “has some natural advantages.” There’s the ability to build solar farms in the desert, “where the sun is shining virtually every single day. That’s an advantage.”

He previously was a utility CEO in Michigan, where the sun doesn’t shine every day, he said.

Laskey said the California trend is seen in other state. About 30 states have some form of a green power mandate known at the renewable portfolio standard.

There’s been action even in states that aren’t “bright blue” politically, he said, including Michigan, Minnesota and Mississippi.

Kennedy noted that even though utilities in California are cooperating, they’ve also fought the process at different points.

“California utilities have led. They haven’t always done so willingly,” Kennedy said. “They have been dragged by the Legislature” and regulatory agencies, and that’s been because of demands from residents.

Before S.B. 350 passed, it was contested, he said.

“There was much, kind of screaming that the sky would fall,” Kennedy said. “People lead, politicians follow, businesses get in line is actually the story of California.”